International investment

G20 countries should rely on open markets to reboot global growth

31/05/2012 - G20 governments should prevent further deterioration in their collective trade and investment policy stance and focus on promoting open markets to re-boot growth in the world economy, according to the OECD, WTO and UNCTAD.

In their seventh report to the G20, the organisations say that the accumulation of new restrictions, combined with governments’ failure to remove existing ones, are clearly adding to downside risks facing the global economy.

“G20 leaders have pledged to avoid protectionism and roll back measures taken during the crisis,” said OECD Secretary-General Angel Gurría. “We know that closing markets stifles growth and makes it harder to tackle unemployment. Countries must resist the temptation to implement inward-looking trade and investment policies.”

Between October 2011 and early-May 2012, thirteen G20 members implemented policy measures related to investment, national security or international trade agreements, according to the report. Most had the effect of opening up markets and increasing transparency for investors.

Other measures, including an expropriation and new entry restrictions, heightened perceptions of risk and could damage the business climate and economic recovery, according to the report.

Work undertaken at the OECD over the past 25 years, included in today’s joint report, documents the level and nature of support and protection to some sectors, such as agriculture, and argues forcibly for further liberalisation of trade in farm products.

The International Collaborative Initiative on Trade and Employment (ICITE) demonstrated that governments which foster open markets and resist protectionism have the best chance of stimulating inclusive economic growth and creating high-value jobs. Trade is an important policy tool that delivers higher quality jobs and increased productivity.

The new Report from OECD, WTO and UNCTAD was prepared in response to a request from G20 leaders at their Summit meeting in Seoul on 11-12 November 2010, when they reaffirmed the extension until the end of 2013 of their standstill commitment to resist protectionism. G20 Leaders asked the OECD and UNCTAD to continue monitoring investment policy developments, and to report publicly on a semi-annual basis, and the WTO to continue monitoring trade policy developments.